Summary of Registering your savings bonds
- How do you account for bonds?
- How much is a $100 savings bond worth after 30 years?
- How much money is needed to open a bonds account?
- What type of account should bonds be in?
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AI Overview
AI Overview
A bond account holds debt securities (bonds) issued by governments or corporations, acting as a loan from you to the issuer for regular interest (coupon) payments and principal return at maturity, offering potentially higher yields than savings accounts but with risks like default or price changes, accessible via brokers like Public or official sites like TreasuryDirect for U.S. government bonds. These accounts provide fixed income, but returns aren’t guaranteed and depend on the bond’s performance and issuer’s creditworthiness, unlike FDIC-insured savings.
How it works
Lending Money: You buy bonds, essentially lending money to entities like the U.S. government (Treasuries) or companies (corporate bonds).
Interest Payments: You receive regular interest, called coupon payments (e.g., semi-annually), based on the bond’s fixed rate.
Maturity: When the bond matures, the issuer repays the face value (principal).
Yield: You lock in a yield at purchase, but it can change if sold before maturity or if the issuer defaults, notes Public.
Types of Accounts & Bonds
Brokerage Accounts: Platforms like Public or Schwab offer diversified portfolios of various bonds (corporate, high-yield).
Direct Government Bonds: TreasuryDirect lets you buy U.S. Treasury securities (T-bills, notes, bonds) directly.
Savings Bonds: Specific government bonds (like Series I or EE) are held in TreasuryDirect accounts and have unique rules, like interest penalties for early redemption within 5 years.
Key Considerations
Risk vs. Reward: Bonds offer potentially higher yields than savings accounts but carry risks like interest rate changes, issuer default, and market price fluctuations.
Taxes: Interest earned is typically taxable, though some municipal bond interest is federally tax-exempt, notes Vanguard.
Liquidity: Selling bonds before maturity means selling at the current market price, not always the face value, and can incur penalties on savings bonds.
Fees: Brokerage accounts may charge fees, impacting overall returns.
How to Open One
Choose a Platform: Decide between direct government bonds via TreasuryDirect or a brokerage for a wider range.
Set Up Account: Open an account with your chosen broker or TreasuryDirect.
Fund & Invest: Deposit funds and select bonds or bond funds based on your risk tolerance and goals.
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Registering your savings bonds
When you buy a savings bond, you must declare who owns the bond. We call that “registering the bond.”
The registration determines who gets the interest on the bond, who can cash the bond, who can change the registration later, who can do other tasks with the bond, and what happens if the owner dies.
Paper bonds: You see the registration information on the bond.
Electronic bonds: You see the registration information in your TreasuryDirect account.
This page is for individual owners (not entities like estates, trusts, corporations, and so on). For estates, trusts, corporations, and other entity registrations: About entity accounts
Registrations for individuals
You have 3 options for registering your savings bonds for people (not entities).
These options also apply to savings bonds you buy for a child under 18 and to savings bonds you buy as gifts for people.
Before you decide:
A note about paying for college or other higher education
You may be able to save on federal taxes by using the interest from a savings bond you cash when you, your spouse, or your child goes to an eligible college or other higher education institution.
However, the IRS rules are that the owner of the bond must be 24 years or older when buying the bond.
So, if you plan to use this tax exclusion, donât register the bonds with the child as an owner. You must be the owner or, if you are married, you may make yourself and your spouse the owners. To use the exclusion, the child may be a beneficiary but cannot be the owner or co-owner of the bond.
For more information: Using savings bonds for higher education
The 3 options for individual registrations
Treasury Hunt®
Do I own a savings bond?
Check the Treasury Hunt® page to read about how to determine if you own savings bonds.